Oak Harbor leaders are hoping to move forward with a funding plan for marina dredging and improvements that doesn’t require an increase in utility taxes for residents.

In order to do that, they are asking members of the Lodging Tax Advisory Committee to increase the size of a grant to help pay the marina debt service.

Last week, the city council approved all but one of the grants recommended by the Lodging Tax Advisory Committee, the volunteer group that makes recommendations about lodging tax grants. Lodging taxes, also known as 2% funds, are collected when people stay at hotels and other lodging businesses; they are earmarked to support tourism-related activities and facilities.

The committee received 21 applications and recommended funding to 15, for a total of $408,000 for next year. The Oak Harbor Chamber of Commerce received the two largest grant applications, totaling more than $162,000.

The council approved the recommendations, except for $24,900 for the marina debt service application because they want it to be larger. Councilmember Eric Marshall, the chamber director, abstained from the vote.

Under state law, the council members can’t simply increase a grant recommendation from the committee, but they can send a request back to the committee for reconsideration.

The council is moving forward with a funding scheme for work at the marina. The city has broken up the marina project into phases. The cost of dredging is estimated at $10 million and the rest of the improvements, inncuding a new breakwater, may cost as much as $40 million, according to the city.

Earlier this year, the council adopted a business and occupation tax, which will likely only impact an estimated 29 businesses and raise about $880,000 a year. The tax is only on gross receipts above the $4 million threshold. The tax is the largest source of funds for marina projects.

But the proposed funding scheme for the work at the marina calls for $55,000 a year in lodging tax grants throughout the life of a bond debt; otherwise, the other proposed source of funds is utility taxes. As a result, the city applied for a $55,000 grant from the lodging tax committee, but the group only approved $24,900.

During the meeting, Councilmember Bryan Stucky, who serves as the lodging tax committee chair, explained that the decision was unanimous but not easy. The recommendations are based on scoring process, he said.

Stucky and the other council members, however, agreed that they want to avoid utility tax hikes.

Grants Administrator Wendy Horn said she was notified that Chalk Fest 2026 was canceled, subsequently freeing up $17,000 in lodging tax money. Stucky said the committee members did not know this when they voted on the recommendations.

The committee will have a mandatory 45-day review, after which the council may adopt any new recommendations.